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Bolivian nationalization bid may affect foreign investment

LIMA, Jul 09, 2012 (Xinhua via COMTEX) --
The Bolivian government has picked up
its pace in nationalizing private corporations this year, a bid
that analysts said may have a limited negative impact on the
country's worsening investment environment as feared by
multinational corporations.

The South American country has witnessed two waves of major
nationalization in the past two months, as the Bolivian
government, headed by President Evo Morales, has taken up the
ownership of the Colquiri Mines and an electric company.

The mining company had belonged to the Swiss Glencore
International AG while the electric company was owned by Red
Electrica, the Spanish state grid.

The two acquisitions were seen as part of the Morales
government's long-term effort to secure strategic resources and
sectors, but the move has so far drawn only skepticism from
private owners.

Daniel Sanchez, president of the Bolivian Confederation of
Private Entrepreneurs (CEPB), said the nationalization process was
a "bad omen" for investors, as it will "breed doubts over the
investment environment and distrust of the government."

Gary Rodriguez, general manager of the Bolivian Institute of
Exterior Commerce (IBCE), said repeated merging would only scare
off foreign investment, as Bolivia had never ranked among the most
attractive destinations for investment.

Morales, who came to power in 2006, steered the country to the
left with his anti-liberalism and anti-colonialism ideology. He
maintained that the state must control companies in the natural
resource sector to ensure that the country's resources benefited
the people.

The profit of these strategic companies must be used to improve
living standards of the people instead of falling into private
purses, he said.

In the six years with Morales in power, the nationalization
initiatives have claimed more than 30 multinational companies,
covering such sectors as petroleum and natural gas, metal mining,
manufacturing, electricity and telecommunications.

Bolivian analyst believed the increased revenue generated by
the nationalization bid played an important role in enhancing
social welfare and the medical, insurance and education network in
the country.

According to statistics from the Finance Department, 60.6
percent of Bolivians lived in poverty in 2005, while the number
has shrunk to 48.5 percent last year. The percentage of population
that lived in extreme poverty also dropped from 38.2 percent to
24.3 percent.

While trying to win the hearts of the general public, Morales
also worked hard to soothe jittering investors, who both craved a
slice of the country's rich mines and feared that they would get
in the middle of the government and its leftist goals.

Bolivia maintains a policy that welcomes foreign investments,
Morales reiterated, stressing that though the government needs to
control core corporations and resources in the economy, it will
not nationalize all natural resources in the country.

A new policy also states that Bolivian state-owned companies
must be the major share-holder of any new investment projects and
that foreign companies may become no more than cooperation
partners, lowering the risk of any new projects being claimed by
the nationalization initiative.

Moreover, with its abundant oil, gas and mineral resources and
its primitive infrastructure, Bolivia, as the poorest country in
the region, still proves to be a promising haven for foreign
capital, which encourages investors to seek fortune here amid a
sluggish global economy.